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A new reference price for gold will be available in India that is guaranteed free from distortion and ambiguity.
NCDEX, the leading commodity exchange, today announced the launch of GOLDHEDGE, an innovative gold contract that will signal the most transparent and straightforward price benchmark of this precious metal to the consumer. The contract is available for trading from January 16, 2014
For the first time in the 10-year history of Indian commodity derivatives trading, jewellers, traders, banks, consumers, and gold refiners will be able to perceive maximum co-relation between Indian and international gold prices through the GOLDHEDGE contract, which is designed to remain unclouded by domestic demand- supply factors.
"GOLDHEDGE is a new way to discover the price of gold in India. It is innovative and it is the right benchmark for the Indian market where gold touches every household and every pocket," said Samir Shah, MD and CEO, NCDEX at the launch.
GOLDHEDGE is designed as an intention-matching contract, where delivery occurs only when both buyer and seller agree in advance on the quantity and location. With no compulsion to give/take delivery of gold bars, an investor can ignore the landed cost of the precious metal, local taxes, as well as the premium being charged by sellers due to short supply in the domestic market. Instead, he can focus on hedging the most accurate gauge of gold vis-à-vis the international market. And there is substantial saving in initial outgo resulting from this method of price discovery.
In short, by reflecting the true value of gold and offering the perfect hedge, the contract provides a unique opportunity for investors to add gold to their portfolio as a financial asset.
"Our innovative product is the perfect solution to the distortion in prices created by fluctuating demand-supply conditions, and takes forward the RBI's mission of financialization of gold to reduce the burden of imports on the current account deficit. From the feedback we are receiving, all customer segments are enthusiastically awaiting GOLDHEDGE and we expect it to bring back investor confidence in gold futures," Mr. Shah said.
Domestic gold prices have a high correlation with international prices. However, after recent policy measures such as hike in customs duty and the RBI 80:20 scheme for jewellers, the correlation has reduced significantly. The new NCDEX contract is a derivatives instrument that will address the anomalies created by the physical markets in futures prices to provide a correct benchmark as well as allow wider participation in the gold market. India is the world's second largest market for gold.
The summary of contract specifications is given in the table below.
PARAMETER | DESCRIPTION |
Ticker Symbol | GOLDHEDGE |
Basis | Ex-Ahmedabad exclusive of Customs Duty, Local Sales Tax/VAT/Octroi and any other charges or levies. |
Unit of Trading | 1 kg |
Quotation/Base value | Rs per 10 Grams of Gold with 995 fineness |
Tick Size | Re 1 |
Delivery Unit | 1 kg |
Duration of Contracts | One to Four months |
Quality specification | Gold bars of 995 fineness bearing a serial number and identifying stamp of a refiner approved by the Exchange. |
Contract Opening | 1st day of the launch month |
Contract expiry | The contract shall expire two trading days prior to the last |
trading day of the contract expiry month. | |
Initial Margin | 5% |
Delivery Logic | Intention Matching |
As India's leading online exchange, NCDEX is where customers repose trust. It offers the widest range of benchmark products across agriculture, metals and precious metals. NCDEX brings buyers and sellers together through its electronic trading platform. With a widely held shareholding, it enjoys the distinction of being the only exchange in the country promoted by national-level institutions. The institutional promoters and shareholders of NCDEX are prominent players in their respective fields and bring with them institutional building experience, trust, nation-wide reach, technology and risk management skills.
For further details contact Shalaka Kagathra - 9820572798 Corporate Communications NCDEX Kalpesh Sheth - 9820305936 Corporate Communications NCDEX|
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